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Motorola looking to sell PowerPC producer – report

No wonder Apple's keen on IBM

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Speculation that Apple is looking to IBM to take up the role of prime supplier for Mac microprocessor may not hinge on price, as some observers have suggested, but on the long-term viability of Motorola's desktop PowerPC line.

It's not the company's current stance that's under question, but if Motorola sells its semiconductor operation, how committed will the operation's new owner be to providing Apple with processors?

Right now, it's not a problem. While word on the street is that Motorola has a 'for sale' sign up in the chip division's window, according to Silicon Strategies, as yet no one has been tempted.

Motorola management said a few years back that if the company's Semiconductor Products Sector (SPS) failed to improve its financial position, it would be put up for sale. It now seems that in recent times that point has been reached, and the unit will be sold if a buyer can be found. Silicon Strategies points to STMicroelectronics, which in past months has expressed an interest - though it also points out the both companies have denied being in talks.

SPS finally returned to profitability during Q4 2002, but fell back into the red during the first quarter of this year. Given the way the world chip market is faring, it's hard to see SPS getting back into the black during Q2, and that, reckons Silicon Strategies will be all it takes to convince senior Motorola executives, egged on by Wall Street, to exit the semiconductor market.

And that may well leave Apple in difficulty. Last year, Apple CEO Steve Jobs said he was happy with Motorola's roadmap going forward. Motorola is expected to release the 0.13 micron silicon-on-insulator low-k dielectric MPC7457 later this year, a chip that has the potential to take the line to 2GHz (whether it will is another matter). Motorola's focus is the embedded market, so it's not in the business of touting high clock frequencies, but it does produce chips for Apple that are clock well above its 'standard' offerings aimed at embedded applications.

So while the current MPC7455 tops out at 1GHz, according to Motorola's public documentation, it nevertheless sells a 1.4GHz version to Apple and other customers looking for desktop CPUs.

The trouble is, that may change under a new owner. We don't know what contractual obligations Motorola has toward Apple, or whether they would continue to hold should ownership be transferred. But a buyer might decide that the desktop-oriented R&D work wasn't worth the return, and wind down that aspect of its business.

That fear certainly provides an explanation for Apple's growing relationship with IBM, a connection that emerged when Motorola got into trouble for messing up the launch of the original G4 processor, the MPC7400. Yields for 7400s operating at 500MHz or above were so poor, Apple was forced to back-track on its own Power Mac G4 launch promises and offer reduced clock speeds across the range.

IBM was soon after called in to become a second source of G4s. It would be interesting to learn whether IBM did produce G4s for Apple in the first quarter of 2000, as announced, or whether this was a claim made by Apple to 'encourage' Motorola to get a move on. If IBM did make G4s, has that continued across the generations of the processor? Certainly our belief is that the vast majority of G4s come to Apple from Motorola. IBM certainly supplies G3-class chips for iBooks.

It's probably around this time that Apple started talking to IBM about broader PowerPC developments, and the seeds of the PowerPC 970 project were planted, though that processor was to grow much later, and is expected to flower next week at Apple's Worldwide Developers Conference.

IBM is said to be working an a G3-class processor with AltiVec, which along with the 970 could satisfy Apple's chip needs across the board. Sure it's a G3, but with AltiVec, we doubt Apple would have any compunction about dubbing it a G4. Whatever, the point is Apple may soon be in a position to drop Motorola. We're not saying that's what it's going to do, or even that that's what it wants to do. We're simply noting that the option may be there.

And if Motorola is indeed interested in selling off its chip operation, the motivation may be there too. ®

Related Link

Silicon Strategies: Is Moto's IC unit still up for sale?

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Apple downgrades Power Mac CPUs -- but not their prices
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